The Goldman Sachs Group (GS) reported their latest quarterly numbers Tuesday morning and the stock is going to open with a gap to the downside as analysts were anticipating a higher earnings figure.
Let's check the charts to see how this disappointment could play out.
In this daily bar chart of GS, below, we can see prices have been moving sideways from August and dips to the $375 area have been bought until today. Prices tested the rising 200-day moving average line in December and again last week. Friday's gap lower and close below the 200-day line was foreshadowing for today's bearish price action.
The On-Balance-Volume (OBV) line has been in a decline since early June and tells us that sellers of GS have been more aggressive for months. The Moving Average Convergence Divergence (MACD) oscillator is right on the zero line and likely to move below it with today's price weakness.
In this weekly Japanese candlestick chart of GS, below, we see a weakening picture. The two most recent candles are a bearish engulfing pattern. Even though the trend before the pattern was sideways instead of up, I think the pattern will still be bearish and prices are set to decline. Prices have closed below the 40-week line.
The weekly OBV line is pointed down and so is the MACD oscillator.
In this daily Point and Figure chart of GS, below, we can see a potential downside price target in the $345 area. $345 is not a good support zone so the risk is for still further weakness in the weeks ahead.
Bottom line strategy: GS is anticipated to gap lower Tuesday and extend those losses. I do not consider this weakness a buying opportunity and longs should exit. Avoid the long side.
